Dead or Alive: An Update on Fast Track's Prospects

About the Author

I first want to recognize that The
Heritage Foundation has been very strong in its commitment to the
issue of free trade. It has not been an easy endeavor for
conservatives, who, for so long, have stood firmly for policies
like cutting taxes (and we all know that a tariff is a tax) and who
sought to implement a goal outlined back in 1947 with the
establishment of the General Agreement on Tariffs and Trade--to
break down trade barriers. It seems to me that clearly this has
been the right position, one that my political party (and I happen
to be a Republican) has embraced since the failure of the
Smoot-Hawley Tariff Act in the 1930s.

As a party, Republicans traditionally
have pursued the free trade route. Now, unfortunately, our party
has more than a couple of conservatives who virulently oppose the
idea of cutting taxes, meaning they pursue protectionist policies.
The Heritage Foundation, however, has continued to be in the
forefront of pursuing the conservative goal, and several things I
can say today should make you feel good about this.

RONALD REAGAN'S VISION AND LEGACY

I can remember back to November 7,
1979, when Ronald Reagan announced his candidacy for the Presidency
of the United States. If you recall, in his outline of proposals
about foreign policy, he clearly wanted to pursue market reforms,
and democracy was very key as well. But one of the most important
parts of his announcement was his idea of implementing free trade
among the Americas. Now we are at a very interesting juncture; one
in which we see President Bill Clinton finally calling on the U.S.
Congress (and we've been waiting three years for this) to give him
the authority to implement the vision Ronald Reagan had back in
1979.

The United States had a great
responsibility during the 1980s to establish this economic model of
free trade and encourage democracy. If you look back to 1979 again,
you'll remember that Daniel Ortega and his communist Sandinista
guerrillas in Nicaragua overthrew Anastasio Somoza. We witnessed
tremendous problems on the isthmus of Central America; and,
obviously, debt problems as well as a wide range of other very,
very unfortunate circumstances existed throughout the rest of the
South American continent. It seems to me that if we look at where
we are now, we'll see that we have had tremendous success. We all
know that we have seen some form of democracy develop in virtually
every country in this hemisphere, with the exception, of course, of
Cuba.

Now I believe we have come to a point
at which we must encourage greater free-market reforms. That's one
of the priorities I have in going with the President on this
upcoming trip to South America. Another is to encourage greater
democratization and political pluralism. But I think that, as we
pursue those goals, we will recognize what Ronald Reagan understood
very well--that free-market reforms and democracy are not
independent. They are, in fact, interdependent, along with the
issue of free trade. So I believe that, if we continue and
encourage market reforms and democracy, free trade will follow.

THE IMPORTANCE OF PUBLICIZING OUR
FREE-TRADE SUCCESSES

The United States has been the
strongest, most dynamic trader in the world. But we have gone
through this past three-year period without fast-track negotiating
authority, and it has been tough for many of us who want to pursue
the free-trade agenda. I have tried to be rather even-handed in my
criticism of both the Clinton Administration and the business
community. Why? Because I believe the real test of the success of
free trade will be based on the level of public support for it. And
the level of public support obviously is not terribly strong right
now. If we look at public opinion polls and the advertising
campaign out there, we see there is a fear factor. People are
afraid to mention those "horrid" acronyms like NAFTA [North
American Free Trade Agreement] or WTO [World Trade Organization],
and I think this is wrong. My state, California, has a half-million
jobs hinging on trade with Mexico. We have had great success with
NAFTA, like the tremendous increase in the level of exports to
Mexico, so we can see that NAFTA is working. But one should look at
NAFTA's successes not simply in the area of trade; NAFTA has also
been a significant foreign policy tool.

If we go back to the early 1980s and
look at the devaluation of the peso in Mexico under President
López Portillo in 1982, we can ask, what happened afterward?
We saw nationalization of the banks follow in Mexico, and we saw
the erection of tariff barriers that cut by 50 percent the flow of
U.S. exports into Mexico. But in December 1994, we also saw a
similar devaluation of the peso; however, because of the existence
of the North American Free Trade Agreement, we were able within
seven months to get back to where we had been before the
destabilization. In the 1980s, it took us seven years to get to
that point. Why was it so different in 1995? Because NAFTA had
locked in decentralization and privatization, and it prevented
Mexico from erecting the tariff barriers that they had erected in
the early 1980s. So it seems to me that we need to spend time
pointing to successes of NAFTA like this.

And if we look at the World Trade
Organization, the United States has done pretty dog-gone well. I've
been a little uncomfortable during my last two appearances on CNN's
Crossfire because they had me sitting first with Geraldine
Ferraro opposite Pat Buchanan, and second with Bill Press opposite
Pat Buchanan. And that's just within the past few weeks. But both
appearances related to the issue of international trade, and the
one question I posed was: "Name a single U.S. law or law of another
country that has been changed because of the World Trade
Organization." Pat Buchanan had no response to that question
because, frankly, there is not a single law that has been changed.
So the big sovereignty question out there is one really red
herring.

So, again, when one asks where we are
going from here on this issue of fast track, I think we need to
point to the successes of NAFTA. The Clinton Administration has
failed to do this, and I would like to see the business community
do more in stepping up to the plate and talking about the benefits
of free trade--not only for the exports that are important to many
parts of the U.S. economy, but also for the other half of the
equation that, unfortunately, is so often forgotten. In fact, this,
too, is one of my criticisms of the Administration. President
Clinton constantly falls into the trap of subscribing simply to the
18th century mercantilist view of trade that says the only benefit
from trade is exports. We in the United States have the highest
standard of living on the face of the earth for one simple basic
reason: the entire world has access to our consumer market. And
that so often is forgotten. I have talked with the President
personally about this, and I've talked with [U.S. Trade
Representative] Charlene Barshefsky and Secretary [of Commerce
William] Daley and others. I'm sure that I'll have a chance to
bring this topic up next week on our trip, because it's one half of
the equation on trade.

I think we can be proud of the things
we have accomplished. But we need to recognize the successes.
Again, in California, we have suffered from horrendous cuts from
the defense and aerospace industries. How is it that our economy
has improved despite these cuts? It has improved through
international trade--both exports and imports. There are several
real benefits to international trade. One of them, of course, is
comparative advantage. People should do what they do best. In an
example that I frequently cite (again, a slightly parochial one),
many people were very, very distraught when they saw the last
television manufacturer in southeastern Missouri go out of
business. And I said, so what? I would rather see the United States
providing 95 percent of the world's programming than worrying about
manufacturing a few television sets, which may be made less
expensively and more efficiently in other parts of the world.
Comparative advantage is key, and if you couple it with competition
and what competition does for the market, the benefits become
obvious.

Clearly, one need look at only the
automobile industry in the 1980s. It's no secret that my intern
Hans and I lumbered over here in my 1984 Chrysler Fifth Avenue,
which is not the finest automobile. But I juxtapose that experience
on driving my Chrysler LHS in southern California, and the
difference is night and day, not just in the age of the cars, but
in the technology and the quality. And that difference came about
because of competition--competition from producers of automobiles
in the Pacific Rim. Competition is very key in ensuring that we as
a country stay strong and sharp.

We also have to realize that
international trade is key to this flow of technology and
information. I'm very proud tonight--in fact, thanks to one of the
many Heritage alumni who have flowed through my office, a guy who
does a spectacular job with all of the computer work and who used
to be with Town Hall here--that I'm hosting another Democracy.net.
I am also proud of our Web page (http://www.house.gov/dreier/)
. I encourage people to get on it. The flow of technology and
information is very, very key to this area of international
trade.

And we have to look at the impact on
prices--not just the impact of the final products that come in at
lower prices, but the raw materials that come in to our country,
allowing us as a country to produce the best-quality products for
exports. It is a win-win situation, and there are great benefits;
but we need to continue to talk about those benefits.

THE POLITICAL CLIMATE FOR FAST
TRACK

In exactly 27 minutes, Chairman Bill
Archer will be bringing down the gavel in the Ways Means Committee
to proceed with markup on fast-track negotiating authority. There
is a lot of controversy around this issue, and we have spent the
past few weeks working on it--after the Clinton Administration gave
us a whole month of delay in August when our staff sat ready,
willing, and able to take on a request from the White House. We
finally got it just a few weeks ago, and we've been going through
long and drawn-out negotiations. At 2 o'clock yesterday morning, an
agreement was finally struck that I think sees a little
give-and-take, but that does not get away from that very, very
important goal that fast-track negotiating authority does not get
into areas not related to trade.

We all are concerned about
environmental quality; and we are all concerned about the rights of
workers. But at the same time, as I was saying earlier about the
WTO and NAFTA, we don't want to see our domestic labor and
environmental laws changed. And so we continue to work, and the
agreement that we struck ensures that we will not see those kinds
of changes. The only very minor caveat is--and this exists under
the WTO and NAFTA--if we see that a country with a goal of trying
to gain new markets were to change or diminish its environmental
standards, for example, then there would be a dispute process to
deal with that.

Let me just throw out one example. If
Chile's government were to make a decision to allow a compromise
that violated an environmental law, and they began dumping their
sludge into the streets of Santiago so that they could deal more
cost effectively with the copper industry in our state of Colorado,
then that could be viewed clearly as a trade-related area and go to
some sort of dispute-resolution operation like what we have with
NAFTA. But there is nothing under this fast-track authority that
conceivably would force a country to raise its environmental
standards or labor standards based on the agreement. That has been
a very key priority item for us. The main reason is that we believe
trade is clearly the best way to improve standards of living and to
see domestic demands for environmental quality improved.

I've argued consistently that trade
must be addressed independently of those issues, especially as we
look at the issue of the People's Republic of China. President
Clinton very wisely decoupled the trade issue from concerns about
human rights, saber rattling in the Taiwan Strait, Tibet, weapons
transfers, and a wide range of areas. Trade must be addressed
independently of those issues because the benefits of trade address
many of those concerns. We should address those issues on a
different track.

For example, yesterday morning,
Congressman Joe Pitts and I spent an hour with Ambassador Lee at
the Chinese Embassy talking about religious persecution, and we
made a specific request before Jiang Zemin's visit [to Washington,
D.C., in October]. We hope to see Pastor Xu and several other
religious leaders who have faced persecution released. But we are
dealing with those issues on an independent track, and that's why
we said, as we look at gaining fast-track negotiating authority,
let's simply use the model that we have established for our
relationship with Beijing through most favored nation trading
status for China. Let's deal with the issues of worker rights and
environmental concerns on a separate track. I think we have ended
up having a degree of success in doing that.

But it's no secret that many
protectionists--people who want to kill any kind of international
trade agreement--have expended a great deal of time and energy
putting politically popular questions of worker rights and
environmental concerns at the forefront really as a cover to kill
any kind of trade agreement. So I will tell you that it's going to
be an uphill battle because there are protectionists within both
political parties. I'm happy to say that only the leadership of the
Democratic Party with Dick Gephardt and David Bonior are strong
opponents of this. Speaker Newt Gingrich has been a strong
supporter of this issue; he understands full well the importance of
international trade. There are some Republicans, I admit, who are
strong free-traders and who are concerned about the prospect of
giving in to this President--something for them that may be
politically unpopular with their constituents at home--when the
President's own team is not providing the support that is
necessary.

In light of this, we are hoping that
we'll be able to have 90 votes among the Democratic members of the
House of Representatives on this issue. The President, just within
the past 24 hours, has really begun his full-court press on it, but
it's going to take a lot of work. The indications are that there
are somewhere between 40 and 60 Democrats who are supportive. We
really do need 90 votes. In the Ways and Means Committee that will
be meeting in just a few minutes, we're counting on at least
five--I hope we get six or seven--Democrats on the Ways and Means
Committee to support fast track because, traditionally, while the
Republican party has led the charge for free trade since
Smoot-Hawley in the 1930s, this has been a bipartisan issue. We've
been able to gain the support, not necessarily of the Democratic
leadership, but of many rank-and-file members and other leaders on
international trade in the Democratic caucus. We want to do what we
can to insure that fast track happens this time, and we will know
within the next few hours whether we have that bipartisan support
coming out of the Ways and Means Committee. But when that happens,
the real work begins in convincing many of our colleagues to join
on board. I would guess right now that, at best, we have about a
50-50 chance of success in passing this.

I can't overemphasize the critical
importance of fast track. South America is very important, but the
28 countries of the Asia-Pacific Economic Cooperation forum
comprise a very, very key area, too, and we need to look at the
prospects of negotiations there. In South America, we have a
decision that was reportedly just made today among the members of
Mercosur--Brazil, Argentina, Paraguay, and Uruguay--that, if the
United States approves fast-track negotiating authority, they will
become part of the Free Trade Agreement of the Americas, but only
if these four countries can go in as a bloc. That to me is very
troubling, because there are tremendous disparities that exist
between Brazil and Argentina, for example. So I think that we need
to address that. It is going to be one of the questions that I'll
be raising down there on my trip to South America with the
President. Part of the reason this is so important, too, is that
when it comes to national security, Brazil has been tilting toward
Western Europe. It seems to me that we have a real responsibility
to maintain our preeminence as the leader worldwide, but
specifically in this hemisphere. So, when I deal with my
conservative friends, I simply hearken back to November 7, 1979,
and remember how Ronald Reagan envisaged this accord. We now have
President Clinton asking for fast-track negotiating authority. I
think that we as conservatives have a clear responsibility to do
everything we can to make it happen.